Fossil fuel ban could cost economy €1.8bn

A proposed ban on the future exploration and extraction of fossil fuels in Ireland could cost the economy up to €1.8bn each year, according to a new report.

Independent research by the Oireachtas Library and Research Service has estimated that controversial legislation proposing the ban on issuing gas and oil exploration licences by the Minister for Communications, Climate Action and Environment could come at a high cost including potential losses to the Exchequer of up to €50m per annum.

However, the research found the Private Members Bill being put forward by Solidarity People Before Profit could also result in financial savings through the increased use of renewable, indigenous sources of fuel as well as through reduced healthcare costs arising out of improved air quality.

The Petroleum and Other Mineral Development (Climate Emergency Measures) Bill 2018 proposes that no application for an exploration licence for oil is approved once the monthly mean average of carbon dioxide in the atmosphere exceeds 350 parts per million. The monthly mean average in May was over 411 parts per million.

The report by the Oireachtas service said the main potential losses for the State would arise out of reduced revenue from exploration and discoveries of new fuel sources as well as income tax receipts.

It estimated that foregone revenue could range from €8m to €50m per annum. It concluded the legislation, if enacted, would have a disproportionate impact on certain regional economies and local employment.

Companies involved in the exploration industry or potential new entrants would also be adversely affected.

The costs could include an extra €530m to Ireland’s energy bill which could potentially arise from an increased reliance on the import of natural gas if the ban is imposed.

The report said it had not costed the benefits and savings which could arise from greater use of renewable energy sources and reduced healthcare costs.

However, it said cutting the amount of fossil fuels in Ireland’s energy mix would reduce the Government’s exposure to EU fines for not reaching greenhouse gas emission reduction targets.

Revenue from exploration is provided by four commercial gas fields — Kinsale, Ballycotton, Seven Head, and Corrib through rental fees, application fees, royalty payments, corporation tax and income tax, which collectively paid an estimated €54.9m to the Exchequer last year.

However, the proposed bill will only impact on future licences.

One of the bill’s sponsors, People Before Profit TD Bríd Smith, described the proposed ban on exploration for oil and gas as “a pretty modest proposal” which could have “huge significance globally”.

The bill has received backing from the Green Party, Fianna Fáil, Sinn Féin, Labour, and Independent 4 Change but is opposed by the Government. If pbaded, Ireland would be the fifth country in the world to implement such a ban, after Costa Rica, Belize, France, and New Zealand.

Last week the junior minister for natural resources, Seán Canney, reaffirmed Government support for offshore exploration and said that Ireland would continue to need oil and gas supplies for the foreseeable future.